Blinder Corporation Was Having Some Cash Flow Problems

question 19

Multiple Choice

Blinder Corporation was having some cash flow problems.One of its creditors agreed to accept $25,000 in payment of a $40,000 debt to help the company out of the jam, even though it is not bankrupt.How does Blinder treat this debt repayment?

• A)Blinder has neither income nor loss
• B)Blinder must recognize $15,000 of income
• C)Blinder must reduce the basis of assets by $15,000
• D)Blinder must reduce tax attributes by $15,000

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Definitions:

Anomie

A state or condition of societal normlessness, where lack of clear standards and values in society leads to personal disconnection and social instability.

Participatory Democracy

A system that requires citizens to be involved personally in decision-making through open and engaged debate and discussion.

Bureaucracy

An organizational structure characterized by a hierarchy of authorities, a clear division of labor, explicit rules, and impartial decision-making.

Jurisdiction

is the official power or authority to make legal decisions and judgments, often within a specific geographic area or over certain types of legal cases.